India’s retail and service sectors marked a historic festive season in Diwali 2025 as total trade volume reached approximately ₹6.05 lakh crore, according to a nationwide survey conducted by the Confederation of All India Traders (CAIT).
The breakdown:
- Goods: ~ ₹5.40 lakh crore
- Services (packaging, logistics, hospitality, delivery, event management etc): ~ ₹65,000 crore
The total figure marks a ~ 25% increase over the previous year’s reported figure of ~ ₹4.25 lakh crore.
What’s Driving the Surge?
Here are some of the main drivers behind this exceptional festive rally:
- GST rate reductions: A large portion of traders (72 %) cited lower Goods and Services Tax (GST) rates on items like footwear, garments, home décor and consumer durables as a key reason for increased volumes.
- “Swadeshi” / “Vocal for Local” momentum: The CAIT report notes that around 87% of consumers opted for Indian-made products during the festival period, leading to a sharp drop in demand for certain imported items (notably Chinese goods).
- Stronger consumer and trader confidence: The Trader Confidence Index (TCI) was reported at 8.6/10 and the Consumer Confidence Index (CCI) at 8.4/10—both at decade-high levels.
- Penetration beyond metros: Rural and semi-urban India contributed about 28% of the total festive trade, signalling deeper consumption beyond Tier 1 cities.
- Service sector boost: Beyond goods, the growth in services (logistics, hospitality, packaging etc) indicates a multiplier effect of the festive period.
Sector-Wise Trend Snapshot
According to CAIT’s breakdown:
- Grocery & FMCG: ~12% of total trade.
- Gold & Jewellery: ~10%.
- Electronics & Electricals: ~8%.
- Consumer Durables: ~7%.
- Readymade Garments/Gifts: ~7% each.
- Home Décor/Furniture: ~5% each.
- Miscellaneous / other items: ~19%.
Why This Is Significant
- This marks the highest-ever festive trade recorded in India’s retail history.
- The dominance of non-corporate/traditional retail channels (accounting for ~85% of trade) suggests that small traders remain the backbone of India’s festive economy.
- The strong preference for locally manufactured goods could have broader implications for domestic manufacturing, supply-chains and “Make in India” policies.
- The deepening of consumption into semi-urban and rural markets indicates broad-based demand pick-up, not just urban or affluent segments.
Risks & Things to Watch
- While the surge is impressive, analysts caution that a large portion of the increase may be seasonal, tied to the festival rush rather than sustained year-round growth.
- The question remains whether the consumption momentum will carry forward into post-festive months (wedding season, winter, next big sale cycles).
- For small traders and manufacturers, translating this festive spike into steady business will require infrastructure, credit access, logistics. CAIT has recommended improvements in these areas. Moneycontrol
- The reliance on tax cuts (GST) as a driver raises the question of how much further upside there is if those policy tailwinds fade.
Implications for Stakeholders
- Retailers & manufacturers: This boosting of demand presents an opportunity to build inventory, ramp up production, and capture market share—especially for Indian-made goods.
- Small and medium enterprises (SMEs): The statistics suggest they are gaining traction; building capacity, supply-chain resilience and credit access will be crucial.
- Consumers: With broader choices and likely better deals (thanks to GST cuts, local manufacturing focus), consumers may enjoy better value during such festivals.
- Policymakers: The data underscores the impact of fiscal/tax policy (GST cuts), manufacturing policy (local goods promotion) and rural/semirural inclusion.
- Investors & economy watchers: Strong festive trade is a positive sign for consumption-led growth, which is key for India’s macro trajectory. But sustainability remains a key question.
Looking Ahead
- If the consumption momentum continues into the winter and wedding seasons, retail and manufacturing sectors could see sustained growth. CAIT itself expects further momentum. Fortune India
- Monitoring whether traditional retail (offline) retains the growth and how e-commerce plays in tandem will be important.
- Strengthening support for logistics, warehousing, Tier 2/3 town markets will be essential to convert festive spikes into structural growth.
- Further policy tweaks (tax, credit, infrastructure) may be needed to ensure that the “Diwali bump” isn’t just a one-time blip.
Summary
With Diwali 2025 sales hitting an unprecedented ₹6.05 lakh crore, India has seen one of its strongest festive consumption surges on record. The combination of GST rate rationalisation, a shift toward Indian-made goods, and broad-based demand beyond metros all contributed to the surge. While the numbers are impressive and encouraging for both retail and manufacturing, the key for the economy will be sustaining this momentum beyond the festival season.
